Deciding to file for bankruptcy is serious and should be looked at seriously. Check out the advice found below so that you can know what you are up against when faced with bankruptcy. Find out all the information you can before filing for bankruptcy.
If you are earning enough to cover your bills, don't file for bankruptcy. Filing for bankruptcy can really damage your credit in the long run, by staying on your report for up to ten years.
Don't pay for the consultation with a lawyer who practices bankruptcy law, nearly all attorneys offer free initial consultations, so you should be able to meet with a few before you make a final hiring decision. Do not make any final decisions until every question you have has been answered. It is not necessary to come to a decision immediately following the meeting. If you're unsure, don't hesitate to talk to multiple bankruptcy lawyers.
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Once bankruptcy has been done, open new credit so you can rebuild your history. You may not have unsecured credit options, however, secured cards can be a workable plan. If you get a regular, unsecured card, you may end up paying astronomical interest rates. By getting a secured card, you are creating a new, clean credit history, which will help you in the long run.
You shouldn't incur any new debt if you will be filing for bankruptcy. Buying lots of stuff may seem okay, since the debt is going to be wiped out anyway, but courts aren't very keen on that sort of behavior. Take responsibility for your debt in whatever way you can. Now is the best time to begin displaying smart financial behavior.
If the bulk of your financial problems includes your student loans, bankruptcy may not be the simplest option for you. Although regulations may be different from one state to another, student loan debt usually is a hard debt to discharge. In order to have a chance at getting it discharged, you must show "undue" or "extreme" hardship.
Don't make the mistake of thinking that Chapter 7 bankruptcy is a magic debt eraser. Some secured debts may need to be reaffirmed, which means you have to draft a new agreement for repaying them, and some debts aren't dischargeable under most circumstances. For example, child support payments, alimony and other court-related fines cannot be discharged by filing for Chapter 7.
Most people that file for bankruptcy try not to use credit cards again. In reality, though, credit cards can be a useful tool for people who are looking to rebuild their credit score after bankruptcy. You have to reestablish your credit once you hurt it, this way you can still position yourself to take out things, such as home or car loans, in the future. Start with one single credit card, and rebuild your credit once more.
Always be honest and forthright when it comes to your bankruptcy petition. Not hiding any assets or income is essential for avoiding possible penalties and your ability to re-file at some point in the future.
In order to avoid ruining your credit as much as possible, use bankruptcy only as a last resort. Some creditors will settle for lesser amounts on debt, or help you work out a more affordable payment plan. This could be a good way to avoid bankruptcy and protect your credit score. Prior to filing for bankruptcy, it makes sense to investigate debt consolidation options.
Consider Chapter 13 bankruptcy, if you chose to file. If you posses a regular source when it comes to income, and you have less than $250,000 of unsecured debt, you could file using Chapter 13 bankruptcy. Not only can you repay your debts through consolidation, personal property can be kept, as well as real estate. Expect to make payments for up to 5 years before your unsecured debts are discharged. Remember that you must make every payment. Missing even one could cause the court to dismiss your case.
As shown in this article, bankruptcy doesn't happen overnight. There are a number of things to do, each of which deserves careful attention. Keep this article's advice in mind and you will probably stand a better chance of laying all the groundwork for your own bankruptcy properly.
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